The Australian government and crossbench senators have agreed on legislation that would cut the company tax rate for taxpayers with a combined turnover of as much as $50 million.

With $24 million in estimated cost over a 10-year period, the measure is intended to foster economic activity and employment from small- to medium-sized enterprises.

Cut in company tax rate

The company tax rate reduction will be implemented gradually over 10 years beginning in the 2016-2017 income year. This is how the reduction will occur during the first phase:

Income YearTurnover Threshold

<$2m

>$50m

<$25m

<$50m

>$50m

Existing Rates

28.5%

30%

30%

30%

30%

2016-17

27.5%

27.5%

30%

30%

30%

2017-18

27.5%

27.5%

27.5%

30%

30%

2018-19

27.5%

27.5%

27.5%

27.5%

30%

Concessions for small business entities

In addition to the company tax cut, there is another measure in the legislation that would aid small businesses. Effective 1 July 2016, a small business entity (SBE) will be defined to include all entities with a combined turnover of under $10 million. Previously, the figure was $2 million.

These entities will be entitled to the following concessions:

1. Immediate write-off for assets amounting to less than $20,000 each

This concession allows SBEs to write off assets amounting to not more than $20,000 rather than depreciate them over their effective life. It is scheduled to culminate on 30 Jun 2017, thus SBEs need to be quick to be able to claim this concession.

2. Streamlined depreciation for other assets

For assets that cannot be immediately written off, SBEs can combine eligible assets together and depreciate it at 15% for first-year assets and at 30% for assets bought in previous years. This will give SBEs a bigger up-front depreciation claims.

This concession also ignores the purchase date as it relates to calculating depreciation, allowing businesses to obtain a full-year depreciation in the year of purchase.

For instance, an equipment amounting to $100,000 bought on 1 June 2017 would be entitled to a depreciation of $15,000 in the 2016-2017 year and $25,500 in the 2017-2018 year. In the past, SBEs could only claim one month’s depreciation in the year of purchase and probably at lower rates than 30%.

3. Up to 12 months of prepayments

Business taxpayers typically apportion prepaid expenses over the appropriate period. With this concession, SBEs can obtain an immediate deduction for prepayments of up to 12 months. Taxpayers who have been out of the arsenal since 2000 can use this as a tax planning tool.

For instance, you can get an immediate tax deduction from prepaying 12 months interest on a business loan in June 2017 in your income tax return for that year.

4. Reduction of amendment period from 4 years to 2 years

Those who qualify as an SBE can have their assessment amended for up to 2 years. The disadvantage is that taxpayers will be locked into their own tax positions and will be unable to request for a refund beyond the two-year period.

For instance, an SBE that files its 2017 tax return on 30 September 2017 has until 30 September 2019 to amend the tax return to raise or reduce tax payable.

5. More concessions

The Small Business Restructure Rollover will be implemented to allow the reorganization of existing family groups.

The start-up costs in establishing a business can be deducted immediately instead of deducted over a 5-year period.

Notably, small business capital gains tax concessions are not covered by the new $10 million turnover limit. The limit for this stays at $2 million.

These measures are generous and are intended to aid small- to medium-sized businesses and provide them with a few tax planning opportunities.

If you qualify as an SBE and you have questions about these new tax changes, contact PJS Accountants. We offer expertise in managing your tax affairs with a full range of compliance, corporate and individual tax services, whether you are a large company, SME, family business or individual. Meet with one of our expert advisers now and ensure you are always compliant with ATO rules.

https://www.pjsaccountants.com.au/wp-content/uploads/2017/04/SMEs-Set-to-Benefit-from-New-Company-Tax-Relief-.jpg400700Tracy Barnetthttp://www.pjsaccountants.com.au/wp-content/uploads/2015/09/pjslogo.pngTracy Barnett2017-04-10 09:00:212017-04-06 15:20:55SMEs Set to Benefit from New Company Tax Relief

One of the popular remuneration schemes for employees is including a car in a salary package. Doing this as part of a salary sacrifice package will result in a ‘novated lease’. Another item that can be salary sacrificed is costs in operating the vehicle. This is commonly called ‘fully novated lease.’

Under a novated lease, the employee, the financier and the employer enter into a three-way agreement. The car will be owned by the employee, and the lease payments will be made by the employer to the financier as well as the any running costs for the vehicle as a condition of giving the car to the employee.

A ‘deed of novation’ will be signed by the employer, the financier and the employee (as the lessee) under which the employer agrees to take over all or part of the lessee’s rights and obligations under the lease of the employee’s vehicle. The employee will normally assume the lease obligations when his/her employment ends.

Aside from the car repayments, the employer would also typically pay for the vehicle’s running expenses, such as registration, insurance, fuel and maintenance.

Fringe Benefits Tax (FBT)

There is a car FBT involved under a fully novated lease. The employer must establish any FBT liability using the statutory formula method as the default, or instead choose to use the logbook method.

Through the employee contributions method, the FBT can be lowered by the employee paying after-tax contributions to the running costs. This is done when the employer agrees to pay the running costs from a combination of an employee’s pre-tax and post-tax income under the salary sacrifice scheme.

Deductibility of after-tax running costs

Can the running costs incurred by the employee from their after-tax income be deducted from their personal return?

If yes, can the employee either use the cents per kilometre method or the logbook method, or any other method, to claim a deduction for the vehicle’s running costs?

When expenses deductions are denied

Generally, the expenses incurred by an employee from using a car provided by an employer are explicitly denied as a deduction under the law.

The instances in which a deduction for ‘car expenses’ is denied include:

an employer during a period provides a car for the exclusive use of a person who is, or of persons any of whom is, an employee of the employer or a relative of such an employee, and

at any time during that period, the employee or a relative of the employee is entitled to use the car for private purposes.

‘Car expenses’ are defined under the law as any loss or outgoing that relates to a car (including expenses in operating the car and its tax depreciation). In addition, deduction is not allowed for car expenses that are incurred:

during the relevant period in which the car was provided, or

is wholly or partly attributed to that period.

Also note that a deduction is denied if the car is used by a person other than the employee, such as relatives or spouses. In this situation, the employee is not allowed to claim a deduction for the running costs in relation to the car – whether by using one of the methods stated above or as a general deduction. This is because the novated lease agreement specifies that the car was provided to the employee for his or her exclusive and private use.

However, regardless of what was stated above, an employee can still gain from such deal. The after-tax payments for the vehicle’s running costs trims down the FBT sum that would have been obligated to salary sacrifice as part of the overall remuneration.

If you have more questions about car salary packages, FBT, and the deductibility of after-tax running costs, consult your accountant, or contact PJS Accountants. We offer accounting and other bookkeeping services to individuals and companies, big and small. Allow our team to evaluate your business and advise you on the right measures to create an excellent financial management strategy for you.

Same as other deductions, records for home office expenses must be kept for five years.

But in reality, it may be difficult to fully comply with the ATO’s substantiation requirements. While it may be easy to keep the receipt for a printer bought for your home office, proving the deductible proportion of a particular utility bill may not be so. To solve this problem, some administrative guidelines have been provided by the ATO.

Substantiating business use proportion

There are three methods for computing the business use proportion for a specific expense. Here they are in order of preference by the ATO:

Explicit proof of business use, like an itemised phone bill.

Records of representative periods of use, like a diary record covering a period of 4 weeks (details below).

A ‘reasonable estimate’, this term is not defined by the ATO, but the taxpayer is required to show that a particular item was ‘reasonably likely’ under the circumstances.

4-week representative records

Claims over $50

The taxpayer is required to save records for a 4-week representative period in every income year so that they can claim a deduction exceeding $50. Whether the $50 cap applies for every expense type or in total is not clear.

The taxpayer can elect to maintain records for more than 4 weeks or to use their deduction on itemised bills (see above) for the full year as the basis for a more accurate deduction. The 4-week record is just the least amount of record-keeping that the tax office will take. Providing a time-limited representative record such as the 12-week logbook for car expense deductions is not a legal requirement.

Don’t forget to correct the deduction for the number of holidays taken.

Proof that the employer expects the taxpayer to work from home or make business-related calls will be looked at favourably by the ATO. But note that the employer expectation is not required by law. According to regulation and common law pertaining to work-related costs, that costs are incurred while earning assessable income and are not personal, domestic or capital in nature is sufficient.

Claims of $50 or below

Though it is not explicitly stated, it can be inferred that the ATO will not be undertaking substantiation checks on claims of $50 or less. But this only applies to the substantiation of the amount, and the taxpayer is still required by law to deduct the amount. Thus, it would be wise for the taxpayer to keep evidence that some work was undertaken from home during the year.

Shared expenses

The ATO accepts an invoice in the name of one person as proof of shared expenses. This may apply if spouses or housemates in shared accommodations each carry out work from home, using shared utilities.

If you have questions or need assistance about home office deductions, contact PJS Accountants. We offer expertise in managing your tax affairs with a full range of compliance, corporate and individual tax services, whether you are a large company, SME, family business or individual. Meet with one of our expert advisers now and ensure you are always compliant with ATO rules.

Budgeting is part of operating a business. This task includes predicting your sales and distinguishing your Key Performance Indicators (KPI) to help you in preparing your budget.

When you have come up with a figure, you and your team now have targets to meet so it’s worth all the effort. So, where do you begin?

Use this 3-step method to forecast your sales.

1. Look at your sales history

You have a sales history, except if you are launching a brand-new business. Even one week’s worth of sales is still sales history. Use it.

Your Point of Sale (POS) system can be used not only to serve customers but also to obtain all sorts of data that you can use for budgeting.

Transaction reports: tells the number of customers served by the business daily, weekly, monthly, etc.

Average Spend: seen in the transaction reports, this is how much each customer spends on their visit to your store

Sales Reports: show the sales flow for a business, or the actual sales daily

You can use this as a starting place from which to forecast your sales. Of course, you want to raise these numbers, but identifying your starting point helps you predict where you can end up.

If you don’t have a sales history, talk to other businesses in your field, your buying associates, or seek help from the ATO. These agencies can provide you with sales benchmarks for any industry you can think of.

2. Find what your KPIs are

A detailed review of your reports will help you find out what your KPIs are. You can always improve your KPIs. You want to predict your sales not only because you aim to improve your future sales and expand your business, but you also want to be able to talk to your team more effectively.

Here are the KPIs you should look for:

Average spend per customer

Number of transactions daily

Sales per day

Sales will not be the same all the time. Determine your busiest days and slowest days. With your KPIs, you can teach your team ways to boost sales and also give them a daily sales target to meet. By identifying and boosting your KPIs, you improve sales, and in turn, your profit.

3. Ask yourself “What if?”

You go through steps 1 and 2 to forecast your sales. For step 3, play the “what if?” game.

What if I raise the figure for the average spend per customer by only $1 or $2 or 10%? How would it impact my turnover?

What if I succeed in enticing customers to make one more visit to my store every week? What difference would it make on my sales?

To compute this, multiply the number of current weekly transactions by a higher number, say 10%. Multiply the average spend for each customer by this figure in visits to find out how much your sales would increase. Then do the same thing using a 20% increase, and so on. Tinker with the numbers. Place these new sales numbers into the top line of your budget, and look at how it impacts your turnover.

After determining your sales budget for the year, break the figures down into weeks to come up with your weekly sales budget.

You can even break it down further into days to get your sales flow. However, always remember that you made all these efforts to forecast your sales because you are sharing these targets with your team.

Forecasting sales and turning it into reality are two separate things. There’s only one way to make it real: share it with your staff and push them to meet the daily sales targets.

It is essential for a business to forecast their turnover. PJS Accountants offers accounting and other bookkeeping services to individuals and companies, big and small. Allow our team to assist you in reviewing your sales history and determine a realistic sales budget for your business. Contact PJS Accountants for enquiries.

Before the financial year ends is the best time for small and medium sized businesses to assess outstanding invoices and bad debts. Many SMEs are no stranger to bad debts. As a business owner, you most likely have had customers who failed to pay for your goods and services.

You’ve performed the work, invoiced the customer, fixed a due date, waited for payment, but you waited in vain. You should write off these amounts.

A large business will typically have a payments team to pursue any invoices that are unpaid and receive payment. Small businesses may simply send out a few emails or make phone calls and then wait for payment.

What if the situation is your customer is unable to pay the money they owe you because of they are in a tough financial situation? Or if you had the misfortune of encountering a customer that makes it a habit to evade paying their debts?

You are not likely to be repaid because this is bad debt. So what remedies are available to you? One thing you can do is write it off as bad debt, as this may entitle you to a tax deductible expense.

Outstanding Invoices

If you own your own business you probably would have had experience problems in collecting payments on time. This kind of problem doesn’t just happen in Australia. In a survey performed by the Commercial Collection Agency Association in the USA, it was found that the chances of getting payment for the whole amount significantly decrease as time goes by.

The results showed that although most invoices are fully paid prior to the due date, the chances that you will receive payment at all has now declined by more than 50% by the time the due date arrives. After 30 days, this has declined even more to just 89.9% and 90 days following the due date, just 69.6% of invoice payments are received. It goes without saying that the number will go down from that point. Results showed that two year following the due date, the chances of getting paid for overdue invoices declines to just 9.3%.

An invoice blackhole is created, causing significant cash flow issues for businesses. This issue has been in existence ever since there have been standard business practices.

How to write off a bad debt

What are the steps for writing off bad debts? First, you must wait 12 months for the invoice to be overdue. After this period, the ATO will recognise that you are unlikely to get paid and let you write it off.

However, if you have recorded the amount as part of your assessable income either for the current year’s tax assessment return or for any past year, you may lodge the updated information about the non-payment to the ATO as part of your assessable income tax return. Make sure to lodge all the required papers prior to the conclusion of the financial year to avoid hindering the process.

Points to keep in mind

Per the Income Tax Assessment Act 1997, section 25-35:

“You can deduct a debt (or part of a debt) that you write off as bad in the income year if: (a) it was included in your assessable income for the income year or for an earlier income, or; (b) it is in respect of money that you lent in the ordinary course of your business of lending money.”

Don’t forget this when you are writing off bad debts. Below are some tips to help you through the process.

Finish the process of writing off bad debts prior to the conclusion of the financial year. Though this reminder may seem obvious, you can easily forget about it when you consider all your accounting and tax responsibilities.

You are only permitted to write off a debt that is bad to make sure you can claim a deduction. This means the debt is not likely to be paid.

You must have documentation to support all debts that you will write off.

The amount that you write off are subtracted from your profits, so be careful when writing off bad debts.

You may claim a refund of the GST paid to the ATO on sales if you report your income on an accrual basis.

When the amount has been overdue for over 12 months, it can be written off and GST credits claimed.

Before deciding to write off a bad debt, ensure you try all alternatives for collecting your Accounts Receivable balance. This is because it will affect profitability. Always remember to write off bad debts during the year and not when the financial year has ended.

Consult your accountant to help you in the process of writing off a bad debt. PJS Accountants offers accounting, taxation and other services to help you run your business affairs efficiently and in compliance with laws. Contact PJS Accountants for enquiries.

https://www.pjsaccountants.com.au/wp-content/uploads/2016/07/pjs_blog15-e1484876509267.jpg467700Tracy Barnetthttp://www.pjsaccountants.com.au/wp-content/uploads/2015/09/pjslogo.pngTracy Barnett2016-07-11 09:00:352016-12-02 13:19:27Tips to Write Off Bad Small Business Debts

Audit proofing your business is a sign of good corporate governance. The essentials to the concept of audit proofing your business is your manner of handling record keeping for your business and your knowledge of the laws that affect you on a day-to-day basis.

Make sure your record keeping is outstanding

Using a professional online accounting software solution should be your first order of business. Accounting software allows you to monitor your cash flow and your trading performance. It will also be of great help when you calculate your GST and PAYG payables.

In case you are subjected to a Business Records Audit by the tax office, the first thing they will ask is “How do you handle your income and expenses?” Utilising professionals to maintain your records and file official documents, such as ASIC forms, Tax Returns and Payroll Tax returns, will be of great benefit to you.

It is also recommended that you seek the help of a professional if you don’t know how to keep up with your taxation record keeping requirements, or if you’re not aware of what you can and cannot claim.

Keep a motor vehicle logbook

You may be exposing yourself to the risk of a rejected claim if you’re not aware that you must maintain a logbook for business motor vehicles for a 12-week period every five years. Things would be a lot easier for you if you can keep and record more supporting information relative to your business claims.

Maintain home office records

Do you need proof to support the fact that you are using part of your home as an office and making a claim based on that point? Then, take a picture of that area assigned as your home office. There may come a time when you could outgrow your home office and decide to move it outside the home. You could have converted your old home office for a different function. By then, it would be too late for you to take a picture!

Record travel activities

Record your travel activities by the hour if you are travelling for business for five nights or more. This way you’d know the percentage of your travel expenses allocated to your business activities.

Also take note that international business activities should be substantial. For example, if you’re in an arts-related job, going to galleries and museums and claiming that it is part of your job is not acceptable. Most people visit those places when they are on overseas holiday. To back your claim for airline tickets, meals and accommodations, you have to go to a work-related conference or attend several business meetings and negotiations.

Lastly, consider the corporate structure of your business. Would it be advantageous now to change to a corporate structure for limited liability protection? Keep in mind that the systems you implement from the very start will safeguard you and your business in the long term.

See a qualified tax advisor, accountant or bookkeeper to help guide you in making a tax change for the better. PJS Accountants can help you organise your tax, accounting and bookkeeping affairs. We work with large companies, SMEs, family businesses and individuals. For enquiries, contact PJS Accountants.

The Australian Business Register will be revoking the Australian Business Numbers (ABNs) of inactive trusts starting February 2016.

Those that will be targeted are entities with tax records showing that they have ceased to operate a business, meaning they have no filings of business activity statements (BAS) and/or income tax returns over the last two years.

According to the business register, about 220,000 trusts could have their ABNs cancelled.

Trusts that are listed with the Australian Charities and Not for Profits Commission, or are a non-reporting member of an income tax group or GST, are exempted from the ABN cancellations. However, a significant number of charities that had been inactive or had no compliance activity have already been de-registered.

A letter will be sent to trustees if their ABN has been revoked. The reason for the cancellation will be stated in the letter, as well as a phone number to call to have their registration restored. According to the government, the reinstatement will be acted upon immediately if the trustee disputes the decision, though it’s unclear if proof of activity or viability will be needed.

If your trust’s ABN is cancelled and you don’t get a letter, it’s probably because your contact information is not current on the ABN database of the Australian Business Register.

Contact your business adviser for any questions regarding ABN cancellation. Work with your accountant or bookkeeper to ensure you are compliant with BAS and/or income tax return lodgements.

PJS Accountants can help you organise your tax, accounting and bookkeeping affairs. We work with large companies, SMEs, family businesses and individuals. For enquiries, contact PJS Accountants.

Tax time is here once again. Have you found time to evaluate your business to determine how it is performing? Or is your schedule to hectic to slot that task in? Being full of activity doesn’t always translate to profitability. For your business to grow, it’s important to evaluate performance regularly. It is also a smart move to review the accounts prior to the end of the year.

The availability of a great variety of cloud solutions had made it easy for business owners to be updated. Efficiency and productivity are also easier to achieve with cloud enablement. In addition, it is now easier to collaborate with accountants and bookkeepers because they can easily get a hold of data to help you with being prepared and up to date.

You can make your year-end smoother by being organised in advance and establishing good systems. Your tax planning will be easier because of your access to live information. You can ready your year-end tax planning well before the end of the year with the help of your accountant.

You can utilise your online accounting software to complete your payroll year end compliance task promptly and efficiently. You can also do your GST, PAYG, payroll and superannuation tasks more easily. And with access to reporting features found in the cloud solutions, you can get information quickly for your compliance filings.

Linking your live feed banks directly with your file allows you to keep your data updated. Setting up your bank rules will let you automate your data processing so it doesn’t accumulate. This will provide you with data that is up to date.

Payroll/PAYG withholding and Superannuation Accounts must be reconciled

Payroll payments and the totals reported for Payroll tax and workcover must be reviewed

GST control accounts must be reconciled

The sums reported to the ATO in the Business Activity Statement and Instalment Activity Statement must be reviewed to make sure the totals reported for the relevant year is right

Profit and Loss and Balance Sheet reports must be run and reviewed

Other items that must be considered when preparing tax:

Expenses prepayment

Interest prepayment

Asset and Depreciation Schedule preparation

If you have executed the acquisition of minor assets properly – know the allowable cap for immediate write off from your accountant

Sale of assets

Deductions for motor vehicle expenses

Unpaid expenses that can be deducted

Donate to charities

Defer income

Make payments to you superannuation before 30 June if you wish to make a claim for the expense in the present financial year

Sales orders must be checked twice in the event they are completed and must be invoiced

Purchase orders must be checked twice in the event they are delivered and must be billed

Invoices must reviewed to make sure that the products or services have been delivered – in case the products or services haven’t been delivered by 30 June, chances are they can’t be treated as income in the relevant year.

Doing some of these things above before the end of the year enables you to lessen the chance of paying more than what you actually owe. This is the reason why it is not advisable to postpone completing the tasks that is important to your business.

Advance planning paves the way for improved business performance and growth. There’s no need for business owners to be buried in paperwork when they possess all the means to build such efficiencies in the marketplace.

With the availability of online accounting solutions and the help of your trusted accountant, you should avoid encountering cash flow problems. Reporting and live information will be right at your fingertips anywhere anytime.

It is important for business owners to know about their tax obligations.

The Structure of your Business

You probably have already chosen the structure by which to operate your business, whether as a sole trader, a partnership, a trust or a company. You may have already applied for and received your ABN with the Australian Business Register. It is vital to set up your business correctly.

If you are an Australian resident for tax purposes, you’re not taxed on the initial $18,200 of your income. This is termed as the tax-free threshold.

Allowable deductions for businesses

The list of expenditures or allowable deductions that businesses can claim is comprehensive. Here are some of them:

odometer readings for the start and end of the period you owned or leased the car, and

written evidence for all car expenses, except for fuel and oil costs. Your logbook is valid for five years. You must have kept a logbook during the first year this method is used. The logbook must cover at least 12 continuous weeks

Applying for GST registration

A business with a turnover or gross income of $75,000 or higher, or a non-profit group with a gross income of $150,000 or higher, is required to register for GST. How do businesses collect GST for the government? It’s by including GST into the prices of their products or services. They then get their GST back from the ATO monies used on business expenditures.

Hiring employees

You may have to employ additional staff as your business expands. Hiring employees is quite clear-cut. However, if you are not familiar with payroll systems and laws, you may end up being penalised.

You may need to withhold taxes from monies you pay to your employees and other staff and disburse these sums to the tax agency. To perform this process, you use the Pay As You Go (PAYG) withholding system. It is recommended that employers register for PAYG withholding prior to making their first payment.

Making super contributions

The ATO is implementing a government initiative called SuperStream, which is designed to make the superannuation system more efficient. It is a new system for handling information and payments that employers have to follow when paying the superannuation contributions for their workers.

Business owners are now mandated to submit data and payments electronically in line with the SuperStream guidelines when making super payments on behalf of their workers.

If you employ 20 or more staff, you have to implement SuperStream contributions as soon as possible. If you have 19 or fewer workers, you have to implement SuperStream beginning 1 July 2015. For larger businesses, the ATO has given them a grace period of until 30 June 2016 to have a plan in place.

SuperStream offers many benefits. One of which is that you can make unlimited super payments fast and easy without leaving the online accounting software that you are using.

BAS submission

GST registered small businesses report and pay several tax duties by submitting activity statements. A form issued by the Australian Taxation Office, the Business Activity Statement (BAS), is submitted monthly or quarterly. Included in your BAS is a summary of the sums of GST that your business should pay and should recover in a specific period.

PJS Accountants can help you organise your tax, accounting and bookkeeping affairs. We work with large companies, SMEs, family businesses and individuals. For enquiries, contact PJS Accountants.

https://www.pjsaccountants.com.au/wp-content/uploads/2016/06/pjs23-e1484876680228.jpg467700Tracy Barnetthttp://www.pjsaccountants.com.au/wp-content/uploads/2015/09/pjslogo.pngTracy Barnett2016-06-06 09:00:482016-12-15 11:13:01What You Need to Know About Small Business Tax

There is no doubt that cash flow is very important. However, how much power does it actually have? Well, cash flow problems kill businesses. According to studies, nine out of 10 small businesses fail because of their failure to manage cash flow properly.

Cash flow management is not complicated. Basically, it means making sure money goes into your business as fast as possible and goes out as gradually as possible. Also, it means keeping the future in mind and implementing actions to ease any possible problems that may arise along the way.

Of course, everything is not easy, that’s why there is a high rate of business failures due to cash flow issues. If you don’t want to become another statistic, here are 7 ways to avoid cash flow surprises:

1. Profitability Does Not Translate to Cash

Money-making businesses are just as likely to fail due to cash flow problems as businesses that are not making money. You can quickly compromise your business if your costs are excessive or you are spending the profits of your business.

2. Forecast, Forecast, Forecast

Gather as much foreknowledge as you can relating to when cash is expected to go in and go out the business. For this, you need cash flow forecasting. The benefits of having a cash flow forecast is to assist you in making sense of your future cash circumstances and help you identify any surprises and do something to avoid them.

3. It only becomes revenue when it is already in the bank

You may have a balanced monthly budget and a great P&L statement, but if you don’t get paid by your clients in time for you to pay your monthly bills, then you may have issues with cash flow, though short term.

4. Learning about Seasonality

Cash flow is heavily influenced by business seasonality. If you operate a seasonal business, a lot of your inventory purchases, employee expenses and other outgoings are incurred before you make a sale. Make plans beforehand and study trends carefully so you will know when business is up and when it is down. This will help you manage your stock and employment expenses better.

5. Be Prepared for Surprises

Your bottom line can be affected by unplanned expenses and emergencies like a natural disaster, the loss of your star salesperson, illness, etc. Plan for the unexpected, whether it is business insurance, a financial cushion, or cross-training of key sales staff.

6. Have an efficient invoicing and collections systems

Small businesses have problems with clients who don’t pay on time. Take a look at some of these figures:

Just 50% of businesses pay on schedule (D&B)

64% of small companies said that invoices are left unpaid for no less than 60 days (NFIB)

14% of small companies listed late payments are the No.1 problem (Kauffman Foundation)

There are several ways to solve this problem, including being prompt in sending invoices out, arranging invoice reminders, and practicing an effective invoicing system. Follow up with payments as soon as you sense that they will be delayed.

7. Be Prepared for Expansion

Growth is accompanied by extra expenditures – marketing campaigns, equipment, inventory, and so on, Be ready for growth, without putting your cash flow at risk, by learning to deal with challenges that hinder business expansion, including cash.

Don’t let your business be impeded by poor cash flow management. Enlist the help of professionals for setting up a good invoicing system for your business. PJS Accountants provides a full range of services including accounting, taxation, business improvement, superannuation, business valuations, asset protection, succession planning and bookkeeping. We have spent more than 30 years dealing with local businesses in Capalaba, Cleveland and the Redlands. Our team is always available to take your call and assist you in whatever business needs. For enquiries, contact PJS Accountants.

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https://www.pjsaccountants.com.au/wp-content/uploads/2017/04/SMEs-Set-to-Benefit-from-New-Company-Tax-Relief-.jpg400700Tracy Barnetthttp://www.pjsaccountants.com.au/wp-content/uploads/2015/09/pjslogo.pngTracy Barnett2017-04-10 09:00:212017-04-06 15:20:55SMEs Set to Benefit from New Company Tax Relief

https://www.pjsaccountants.com.au/wp-content/uploads/2017/02/Key-Legal-Implications-of-Having-a-Company-Car.jpg400700Tracy Barnetthttp://www.pjsaccountants.com.au/wp-content/uploads/2015/09/pjslogo.pngTracy Barnett2017-03-02 09:00:422017-02-23 13:40:59Key Legal Implications of Having a Company Car

https://www.pjsaccountants.com.au/wp-content/uploads/2017/02/Lessons-to-Learn-from-a-Business-Losing-Money.jpg400700Tracy Barnetthttp://www.pjsaccountants.com.au/wp-content/uploads/2015/09/pjslogo.pngTracy Barnett2017-02-23 09:00:102017-02-20 16:24:48Lessons to Learn from a Business Losing Money